Monday, August 25, 2014

California Employers Face Class Action Liability for Failing to Reimburse Work-Related Cell Phone Use

On August 12, 2014, the California Court of Appeal held in Cochran v. Schwan's Home Service, Inc. that California employers face class action liability if they fail to reimburse employees for work-related cell phone use. Employers must reimburse a reasonable percentage of employee cell phone bills, regardless of the cell phone plan or who pays the bill.

In Cochran, customer service managers of Home Service filed a class action lawsuit alleging the company failed to reimburse them for work-related cell phone use. The class included 1,500 employees.  Labor Code section 2802 requires employers to indemnify employees for "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer..."

The Court stated: "It does not matter whether the phone bill is paid for by a third person or at all. In other words, it is no concern to the employer that the employee may pass on the expense to a family member or friend, or to a carrier that has to then write off a loss." The Court found section 2802 is aimed at preventing employers from passing on operating expenses. Also, the Court held employers should not intrude into the private lives of their employees to find out how they manage their finances. While such details may affect each employee's recovery, it is irrelevant in determining employer liability under section 2802. Employers must reimburse employees for a "reasonable percentage" of their cell phone bills if they use their cell phones for work. Failure to do so may subject employers to class action liability for all affected employees.